INTERTANKO ATTENDS SEMINAR ON BRAZILIAN ECONOMY

This week INTERTANKO attended a day-long seminar organized jointly by Den norske Bank and Unibanko of Brazil in Oslo on the business environment in Brazil today.

The Brazilian economy is currently affected by five factors: the global economic slowdown, the Argentinean crisis, the devaluation of the Real, the increase in the interest rates and the energy crisis.

The 2002 elections are not expected to lead to major changes in the current economic model as those parties that currently form the government base are likely to constitute the majority in a new government coalition. Privatisations are on a sound legal basis and will continue to occur, probably at a more accelerated pace.

From a macroeconomic perspective, the enactment of the Fiscal Responsibility Law is expected to contribute to economic stability and lessen the likelihood of a return to the previous high inflation rates. In addition, the Brazilian government has announced a strengthened fiscal and monetary policy over the next 18 months. Inflation in 2000 exceeded the target agreed with IMF of 4% and the government intends to revise the original target to a level of 5.8%. The growth of GDP is expected to be 2.4% in 2001 and 3.0% in 2002, which is significantly lower than the 4.5% in 2000.

Brazil is currently facing a significant electricity shortage and the government is striving to mitigate the current situation. The electricity deficit is currently in the region of 8,000 MW and new capacity will require investments of over US$ 15 B during 2001-2005.

In the energy sector (oil & gas), the government is committed to proceeding with the privatisation process and more transparent rules. Reserves and production growth have shown strong potential, and further foreign investment in the oil and gas sector is anticipated. According to 2000 figures, Brazilian oil proven reserves are in the region of 9,272 billion barrels (87% offshore). Crude oil imports have reduced significantly from 430 mbpd in 1998 to 300 mbpd in 2000, as offshore crude oil production has increased.

New regulations have come into force which support the domestic shipbuilding industry providing financing opportunities for vessels built in the local shipyards. Petrobras is currently undertaking an extensive programme to renew its support vessels.